The stock market gained ground on Monday S&P 500 and the Nasdaq Composite both rise. However, while some stocks soared, others plunged as a technology company announced early results that pulled the market in different directions.
IT heavyweight International business machines (IBM 25.37%) gave a first look at its second quarter results, and management’s statements boosted some market segments while hurting others.
Cybersecurity stocks CrowdStrike (CRWD +12.16%) And Okta (OKTA +10.81%) were both up more than 10% as of 1:45 p.m. ET while the stocks were powered by artificial intelligence (AI). Micron technology (MU +5.07%) And Sandisk (SNDK +4.90%) both rose by 5%. At the same time, however, enterprise software providers like ServiceNow (NOW 5.72%) And Microsoft (MSFT 1.46%) fell by 4% and 1%, respectively.
Let’s look at what IBM said and how it divided the broader market.
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Table of Contents
An ominous warning
In a letter to shareholders published Tuesday morning, IBM issued a stark warning ahead of its scheduled second-quarter financial results release on July 22. The company’s preliminary results showed that revenue rose just 1% to $17.2 billion, resulting in adjusted earnings per share (EPS) of $2.27, up 5%.
The results were well below Wall Street consensus estimates, which called for revenue of $17.85 billion and earnings per share of $3.02.
The shortfall sent IBM shares plunging as much as 26% in early trading, setting them up for the worst trading day in the company’s history.
International business machines
Today’s change
(-25.37%) $-73.65
Current price
$216.59
Important data points
Market capitalization
$273 billionMarket capitalization is calculated solely based on publicly traded shares outstanding. Includes unlisted, private or non-traded dual class shares. The implied market capitalization can vary.
Daily range
$213.23 – $229.92
52 weeks range
$212.34 – $332.46
volume
2.6 million
Avg. Vol
9M
Gross margin
57.80%
Dividend yield
2.32%
What the company had to say explains the far-reaching influence it has had on a broad cross-section of the stock market. CEO Arvind Krishna noted, “We saw in the final weeks of June customers shifting their quarterly capital expenditures to purchasing servers, storage and memory to shore up supply-constrained infrastructure from expected price increases.”
While this was bad news for IBM, it served as a catalyst for flash memory and memory chip makers including Micron and Sandisk. Tight supply and increasing demand have led to epic price increases for these companies. Even after a recent decline, Micron stock is up 694% over the past year (as of this writing), while Sandisk stock is up a staggering 3,750%. IBM’s comments suggest that companies are continuing to shift spending toward AI, which bodes well for Micron and Sandisk.
There’s more. Krishna continued, “Customers were distracted by rapidly evolving, industry-wide cybersecurity concerns during the quarter.” In a subsequent interview, the CEO explained his thinking, saying, “Mythos makes people stop and say, wait a minute, how much do I have to spend.” [cybersecurity]? They wait to make new deals until they know.
When Anthropic unveiled its Mythos preview earlier this year, the Frontier AI model sent shockwaves through the cybersecurity industry, finding “thousands of zero-day vulnerabilities in critical infrastructure,” including “in every major operating system and web browser.” These were previously unidentified vulnerabilities that hackers could use to gain access to vulnerable software. CrowdStrike was one of only two cybersecurity companies originally hired to help address these vulnerabilities.
Today’s change
(12.16%) $22.85
Current price
$210.76
Important data points
Market capitalization
$191 billionMarket capitalization is calculated solely based on publicly traded shares outstanding. Includes unlisted, private or non-traded dual class shares. The implied market capitalization can vary.
Daily range
$189.50 – $210.84
52 weeks range
$85.68 – $210.84
volume
544.5K
Avg. Vol
12.6 million
Gross margin
74.89%
While this means shift in spending fewer The dollars spent on IBM boost the success of cybersecurity vendors like CrowdStrike and Okta.
However, software stocks reacted negatively as investors feared that the aforementioned shift in capital spending would spill over into other areas of corporate spending. That would likely be bad news for companies like ServiceNow and Microsoft, which make a large portion of their revenue from software sales.
Concerns about the impact of AI have already rocked the enterprise software sector, causing Microsoft and ServiceNow to fall 23% and 43%, respectively, over the past year. IBM’s commentary appeared to reinforce those concerns and put additional pressure on stocks.
Many AI stocks have taken a breather as investors take a step back to survey the landscape. If IBM’s letter is any indication, companies continue to spend heavily on adopting AI without losing sight of the cybersecurity implications of these next-generation algorithms.
https://www.fool.com/investing/2026/07/14/cybersecurity-and-ai-chip-stocks-are-soaring-while/
